PSUs outdo pvt firms in creating wealth at D-Street

New Delhi: Never mind the speculation about Mukesh Ambani’s wealth—the government is the biggest gainer of the bull run with about 80 state-run entities adding Rs10 lakh crore in market value this fiscal. That’s nearly half the gains seen by over 4,000 private entities led by RIL.

The government’s promoter holdings in listed entities currently stand at over Rs15,00,000 crore ($400 billion), nearly thrice the combined market capitalization of all Mukesh Ambani group companies at about Rs5,00,000 crore, let alone the personal holding of the group chairman.

According to the latest data available with the stock exchanges, the total market capitalization of all listed companies is about Rs63.5 trillion, which has risen by Rs28 trillion since the beginning of this fiscal.

Of this, the state-run firms have gained Rs10,00,000 crore, while the remaining Rs18,00,000 crore has been shared by all private sector firms put together.

Besides, it is the governments’ promoter holding in these companies that has walked away with a large chunk of the value appreciation — pegged at Rs8.4 trillion — with the remaining Rs1.5 trillion shared by all other institutional and retail investors.

According to an analysis of share price movements since the beginning of fiscal 2008, market capitalization of companies with promoter holdings of central or state governments has more than doubled from just about Rs8,07,000 crore at the last fiscal-end to nearly Rs17,95,000 crore now.

The three most valued PSU firms — energy giant ONGC, commodity trading firm MMTC and mining company NMDC — have contributed more than half the total gain this fiscal.

In the past five years, the total market cap of all listed PSUs have grown over 10 times from just about Rs1,53,000 crore as on 4 November, 2002.

Following the sharp rally in the share prices of PSU firms, four out of the five most valued firms in the country are now state-run companies, which has happened perhaps for the first time in the history.

Reliance Industries (RIL) is the only private sector firm in the top five with a market cap of Rs3,88,000 crore. It is followed by ONGC at Rs2.92 lakh crore, MMTC with Rs2.12 lakh crore, NMDC ( Rs1,98,799 crore) and power major NTPC at the fifth place with Rs1,93,562 crore.

The rally in PSU stocks has also forced all the IT companies out of the top 10 list of corporate entities, based on their market cap, perhaps for the first time since the IT boom early this decade.

TCS, the country’s biggest IT firm in terms of revenue, is now at the 16 spot in terms of market cap, while Infosys has slipped to 14th place and Wipro shey provide a low risk profile and long-term growth prospects in the current volatile market conditions.

The total market cap of all the PSU firms has soared by over 40 per cent in just one month — rising from Rs12.7 trillion a month ago to near Rs18 trillion currently, with stocks like NMDC and MMTC adding the maximum gains.

“The reasons for the government which provides a secure feeling in the minds of investors,” Arun Kejriwal of Kejriwal Research and Information Services said.

MMTC’s share price of has soared 10 times in just two months, with analysts attributing it also to lack of enough liquidity for these shares. “This is mainly due to the lack of liquidity in the stock which helps in moving the stock up so fast,” Kejriwal said.

Government holding in MMTC is 99.3%, while in NMDC it is 98.38%. Its holding in ONGC is also over 74%, and it is 89.5% in NTPC. BHEL, SBI and SAIL have government holdings of 67.72 per cent, 59.73 and 85.82 per cent respectively.

“Another reason driving the surge in PSU stocks could be expectations of a possible divestment of these holdings,” an analyst with a domestic brokerage said.

Currently, seven PSUs have a market cap of over Rs1 trillion, of which two are over Rs2-trillion mark.

In comparison, there were just two Rs1-trillion market cap companies two months earlier. Five years ago, there were none in the PSU space.

Since the beginning of this fiscal, NMDC and MMTC have contributed close to Rs2 lakh crore each, while ONGC has seen a gain of Rs1 lakh crore. The other major public sector firms BHEL, NTPC, SBI and SAIL have also added Rs50,000 crore each.

Indian Oil, GAIL, Hindustan Copper, Nevyeli Lignite, Power Finance Corporation and Bank of India have seen a rise of over Rs10,000 crore to their valuation in the same period.

Just six PSU firms have seen a decline in their market value in this period, resulting in a cumulative market-cap loss of about Rs725 crore. These companies include HPCL, HMT, Rana Sugars, SKM Egg Products, Kerala Chemicals and Elnet Technologies.